USD/JPY Forex Technical Analysis – Strengthens Over 108.839, Weakens Under 108.790

The Dollar/Yen is trading mixed early Tuesday as investors continued to express concerns about a widening coronavirus outbreak in China and its potential impact on the global economy. On Monday, the Forex pair recovered some of its losses from the previous session’s steep sell-off, but investors remained wary about the bounce as coronavirus fears lingered.

At 04:43 GMT, the USD/JPY settled at 108.743, up 0.052 or +0.05%.

For a second session, the USD/JPY is trading inside Friday’s wide range. This typically indicates investor indecision and impending volatility. Helping to underpin the Dollar/Yen is rising Treasury yields and increasing demand for risky assets.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 108.313 will signal a resumption of the downtrend. A move through 109.266 will change the main trend to up.

The major range is 112.405 to 104.436. Its retracement zone at 108.421 to 109.361 is controlling the longer-term direction of the USD/JPY.

The main range is 107.651 to 110.290. Its retracement zone at 108.971 to 108.659 is currently being tested. This zone falls inside the major range.

Daily Technical Forecast

Based on the early price action and the current price at 108.743, the direction of the USD/JPY the rest of the session on Tuesday is likely to be determined by trader reaction to a pair of Gann angles at 108.790 and 108.839.

Bullish Scenario

A sustained move over 108.839 will indicate the presence of buyers. This could lead to a quick test of the short-term 50% level at 108.971. Taking out this level will indicate the buying is getting stronger. This could trigger an acceleration into 109.266 to 109.361.

Bearish Scenario

A sustained move under 108.790 will signal the presence of sellers. This could lead to a retest of the short-term Fibonacci level at 108.659. If this level fails then look for the selling to possibly extend into the major 50% level at 108.421, followed by 108.313 and an uptrending Gann angle at 108.245.